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The United States appears almost certain to avoid a recession, stock indices<\/a> are trading at record levels, and even riskier investments like bitcoin<\/a> are at all-time highs, yet gold, arguably<\/a> the world’s oldest investment, often viewed as a hedge against market losses elsewhere, continues to gain value.<\/p>\n Gold traded at an all-time high of $2,195 per ounce on Friday, extending its year-to-date gain to 5% and its 12-month gain to an impressive 19%, moving in the same direction as the benchmark U.S. stock index S&P 500’s 8% year-to-date and 31% 12-month gains.<\/p>\n The gold rally may come as a surprise to U.S. investors, considering that the record run of the “safe haven” precious metal does not coincide with previous events that triggered all-time highs for gold, such as the financial crisis of the late 2000s and the Covid-19 pandemic.<\/p>\n A key factor behind the gold rally is that things appear far less bright for many non-U.S. markets: the United States’ projected economic growth<\/a> of 2.1% this year exceeds the sub-1% growth expected in other developed economies such as Germany, Japan, and the United Kingdom, while stocks listed on major foreign exchanges have largely underperformed their U.S. counterparts, with Hong Kong’s Hang Seng index down 18% over the past year and the UK’s FTSE 100 down 3%. <\/p>\n “The Western investor is not behind” the gold rally, according to<\/a> Metals Daily CEO Ross Norman, attributing the gains to “phenomenal” demand from Chinese investors seeking to protect themselves from potential economic instability in the world’s second-largest economy amid a commercial real estate crisis<\/a> in China.<\/p>\n<\/div>\n In the United States, there are many other explanations for gold’s rise, as some investors seek ways to bet against the potential for worse-than-expected inflation, reposition their portfolios after the stock surge, and protect themselves from geopolitical instability, with issues such as the wars between Israel and Hamas and Russia and Ukraine, along with the November presidential election looming in investors’ minds.<\/p>\n<\/div>\n<\/div>\n Upcoming interest rate cuts, which will cause U.S. Treasury yields to decline and therefore make returns from another typically safe asset class less attractive. Gold purchases at five-decade highs by central banks worldwide and the possibility of Republican presidential candidate Donald Trump increasing U.S.-China tensions are also all reasons to remain bullish on gold going forward, stated Solita Marcelli, Chief Investment Officer of UBS Global Wealth Management, Americas, in a note to clients on Friday. <\/p>\n $3.3 trillion. That is the amount of gold held by investors, according to JPMorgan Chase strategist Nikolaos Panigirtzoglou. This represents approximately 1.4% of the value of all global investments. <\/p>\n Approximately half of all gold shipments in January went to Hong Kong and mainland China, according to UBS.<\/p>\n Gold’s popularity as an investment follows its centuries-old history<\/a> of maintaining value through inflation spikes and periods of conflict worldwide. Last year, U.S. investors’ confidence<\/a> in the precious metal reached its highest level since 2012, and a Gallup poll showed respondents were more confident in investing in gold than in stocks. The gold rally coincides with a relatively flat U.S. dollar, which typically also gains value during periods of market difficulty; the DXY, which tracks the dollar against a basket of other major global currencies, is up 1% year-to-date and down 2% over the past year. Gold has added 394% in value over the past 20 years, according to FactSet data, below the S&P 500’s 522% return over the two-decade period, but still a remarkable achievement considering that gold is an inorganic material without the potential to return profits to shareholders as a stock would. <\/p>\nKEY FACTS<\/h2>\n
WHAT TO WATCH FOR<\/h2>\n
BIG NUMBERS<\/h2>\n
SURPRISING FACT<\/h2>\n
KEY BACKGROUND<\/h2>\n